HALAL SUPPLY CHAIN MANAGEMENT: Principles ... › 2017 › 10 › u...Halal Indonesia Halal Supply...

Jakarta, 29 November 2015

HALAL SUPPLY CHAIN MANAGEMENT:

Principles & Opportunities

by Dr. Marco Tieman

www.lbbinternational.com2

Evolution of Halal

Halal Indonesia

Halal Supply Chain Model

Opportunities

Agenda

Why – What – How of halal SCM

Q & A

Introduction

www.lbbinternational.com

Introduction

www.lbbinternational.comDr. Marco Tieman

Founder & CEO, LBB International Logistics Consultancy & Research firm Logistics diagnostics, supply chain design & solutions, market research

Adjunct Professor, Universiti Malaysia Pahang Research in logistics & supply chain management Curriculum development Teaching Supply Chain Management (MBA)

Adjunct Professor, Universiti Tun Abdul Razak Research in halal supply chain management Teaching Purchasing & Supply Chain Management (MBA)

Columnist, New Straits Times (Malaysia) Weekly logistics column on Wednesday


Evolution of Halal


Evolution of Halal

Muslim

Company

Halal

Product

Halal

Supply

Chain

Halal Value

Chain

1 2 3 4 So

urc

e: M

arco

Tie

man

, (2

011

) "T

he

app

lica

tion

of

Hal

al i

n

sup

ply

ch

ain

man

agem

ent:

in

-dep

th i

nte

rvie

ws"

, Jo

urn

al o

f

Isla

mic

Mar

ket

ing, V

ol.

2 I

ss:

2, p

p.1

86

-1

95


1. Muslim Company

TRUST:

Validity of halal is

based on the

transfer of

responsibility


2. Halal Product

SOURCE IS

CERTIFIED:


based on the

verification by an

independent halal

auditing &

certification body


3. Halal Supply Chain

USE OF

DIFFERENT

STANDARDS:


based on the halal

certification of

supply chain

partners: supplier,

producer, logistics,

retail, etc.


4. Halal Value Chain

R&D Production DistributionMarketing

& Sales

Reduction

of waste

Reduce

environmen

-tal impact

From

animal to

plant based

Halal

certification

of your

production

Extend halal

towards

distribution

Control of

distribution

channel?

Islamic

branding &

marketing

Sourcing

Are my

suppliers

halal

certified?

How are my

raw

materials

transported?

Islamic Banking & Finance


Towards a Halal Supply Chain

Muslim

Company

Halal

Product

Halal

Supply

Chain

Halal Value

Chain

1 2 3 4


Halal Indonesia


Halal Industryo Processing

o Distributor

o LSP

o Retail

o Restaurants

o Hotels

Consumero Higher halal awareness

o Health awareness

o Lifestyle

o Internet

Government controlo Voluntary ->

mandatory

o G-2-G support

o Support of SMEs

Halal Standardso New products: food,

cosmetics, pharma

o New services:

distributor, LSP, retail

Availability &

Access

Halal compliant

supply chain

TrustHalal assurance

€ €€ €

€€

Source: Imarat Consultants


Integrity of halal supply chains (why?)


Integrity of halal supply chains is becoming an increasing concern for governments and industries due to: 1) halal integrity issues are more likely

to occur than before2) Halal integrity issues are harder to

detect3) Once detected go viral on the

internet, exposing the integrity of country’s halal systems and corporate brands


The neglect of halal requirements throughout the entire supply chain is gradually weakening consumer confidence in halal certified products!


Foundation of halal SCM (what?)


Perception of Muslim consumer

Risk of contamination

Direct contact with Haram

MARKET

requirements

PRODUCT

characteristics

PRODUCT

characteristics

So

urc

e: M

arco

Tie

man

(20

11

), T

he

app

lica

tio

n o

f h

alal

in

su

pp

ly

chai

n m

anag

emen

t, J

ou

rnal

of

Isla

mic

Mar

ket

ing

, 2

(2),

pp

. 1

86

-19

5)

The building blocks


In practice …

Percep onofMuslimconsumer

Riskofcontamina on

DirectcontactwithHaram

MARKET

requirements

Physical

Segregation +

Identification

Packaging

= Best practice!

= Precaution!

= Cross-

contamination!

HALAL

SUPPLY

CHAIN

100 mm

10

0 m

m

REJECTED

100 mm

10

0 m

m

HALAL SUPPLY CHAIN


Perception

Risk

Direct contact with Haram

No

n-M

usl

im c

ou

ntr

y

Mu

slim

co

un

try

So

urc

e: T

iem

an e

t al

. (2

01

2),

Pri

nci

ple

s in

hal

al s

up

ply

ch

ain

man

agem

ent,

Jo

urn

al o

f Is

lam

ic M

ark

etin

g,

3(3

), p

p. 2

17

-24

3

Muslim vs. non-Muslim markets


A supply chain approach towards halal


From a product to supply chain approach (how?)


A ‘Product Approach’ to Halal

Factory Distributor Retailer

HALAL

ASSURANCE

FOOD/PRODUCT SAFETY


A ‘Supply Chain Approach’ to Halal


HALAL ASSURANCE

FOOD/PRODUCT SAFETY

Extending halal assurance from factory to point of consumer purchase

Creating a robust, effective and efficient halal supply chain

Strengthen commercial brands


Halal Supply Chain Model


Logistics

Control

SC Business

Processes

SC Network

Structure

SC

Resources

Halal Policy

Supply Chain Objectives

Halal

Performance

M

A

R

K

E

T

P

R

O

D

U

C

T


Logistics

Control

SC Business

Processes

SC Network

Structure

SC

Resources

Halal Policy


Halal

Performance

M

A

R

K

E

T

P

R

O

D

U

C

T

Halal policy

Halal needs commitment at top management level!

This intention (niyat) is translated into a “HALAL

POLICY”

Amongst others, to address:

1) The responsibility of an

organisation in protecting the halal

integrity (along the supply chain)

2) The scope of halal certification

of the organisation

3) The assurance to the consumer

or customer (promise)4) The method of assurance


Logistics

Control

SC Business

Processes

SC Network

Structure

SC

Resources

Halal Policy


Halal

Performance

M

A

R

K

E

T

P

R

O

D

U

C

T

1) Logistics objectives (reduce lead-times, improve

deliver reliability & flexibility, and reduce integral

supply chain costs)

2) Customer service objectives (order cycle time,

inventory availability, order fill rate)

Supply chain objectives


Logistics

Control

SC Business

Processes

SC Network

Structure

SC

Resources

Halal Policy


Halal

Performance

M

A

R

K

E

T

P

R

O

D

U

C

T

1) Logistics objectives (reduce lead-times, improve

deliver reliability & flexibility, and reduce integral

supply chain costs)

2) Customer service objectives (order cycle time,

inventory availability, order fill rate)

Supply chain objectives

New logistics objectives (e.g.):

1) The reduction of supply chain

layers

2) The conversion of supply chain

partners to conform to halal

requirements3) The consolidation of halal cargo

flows


Logistics

Control

SC Business

Processes

SC Network

Structure

SC

Resources

Halal Policy


Halal

Performance

M

A

R

K

E

T

P

R

O

D

U

C

T

Logistics control

1) Strong partnerships with supply chain partners

2) Develop strategies to secure continuity of supply


Logistics

Control

SC Business

Processes

SC Network

Structure

SC

Resources

Halal Policy


Halal

Performance

M

A

R

K

E

T

P

R

O

D

U

C

T

Supply chain resources

1) Organisation

Halal Committee

Training

2) Information Management

“Halal Supply Chain” code

Tracking & Tracing:

tier 1 customers &

suppliers

chain of custody


Logistics

Control

SC Business

Processes

SC Network

Structure

SC

Resources

Halal Policy


Halal

Performance

M

A

R

K

E

T

P

R

O

D

U

C

T

Supply chain business

processes

1) Order fulfilment -> segregation requirements

2) Flow management -> halal control activities &

assurance activities

3) Procurement -> supplier

management


Logistics

Control

SC Business

Processes

SC Network

Structure

SC

Resources

Halal Policy


Halal

Performance

M

A

R

K

E

T

P

R

O

D

U

C

T

Supply chain network

structure

1) Supply chain partners are halal certified

(preferred) or understand and comply with the

requirements of halal supply chains.

2) Simple supply chains

structures

3) Need for coordination


Logistics

Control

SC Business

Processes

SC Network

Structure

SC

Resources

Halal Policy


Halal

Performance

M

A

R

K

E

T

P

R

O

D

U

C

T

Halal performance


Logistics

Control

SC Business

Processes

SC Network

Structure

SC

Resources

Halal Policy


Halal

Performance

M

A

R

K

E

T

P

R

O

D

U

C

T

Ensure robustness

through reduction and

removing of

vulnerabilities

Consolidation of halal

flows;

CODP at HRDC

Muslim or Non-Muslim

country

Bulk or unitised;

Wet (chilled, frozen) or

dry (ambient)

Halal Supply Chain code;

Tracking & tracing;

Competency of staff

Halal control activities

and assurance activitiesSimple supply chain structure;

Halal gateway partners


1. Communication of “HALAL SUPPLY CHAIN”

code through freight documents, on cargo and

(customs/IT) systems;

2. Seek SYNERGY ADVANTAGES through vertical

and horizontal collaboration;

3. Taking a MANUFACTURER / BRAND OWNER

PERSPECTIVE in halal logistics;

4. Benefits of the FIRST-MOVER ADVANTAGE.

Major Success Factors


Opportunities


1. Brand Owners


HALAL ASSURANCE

FOOD/PRODUCT SAFETY

Extending halal assurance from factory to point of consumer purchase

Creating a robust, effective and efficient halal supply chain

Strengthen commercial brands


• Halal Storage• Halal Transport• Halal freight forwarding

• Halal 3PL solutions

Solution(Complete end-to-end solution)

Service(Specific Services Only)

PHYSICAL ASSET BASED

NON-PHYSICALASSET BASED

Specialised & Advanced

(Value Adding)

BasicActivities(Movement &

Storage)

• HRDC: VAL• HRDC: Processing

• HRDC: Cross Chain Control Centre (Halal4PL Solutions)

2. Logistics Service Providers


3. Halal Industrial Parks

HalalLogis cs

HalalNetwork

HalalCer fica on

Body

HalalIntegrityNetwork

Supplier Produc on Recipient

HalalSupplyChain

Government HalalTradeIslamicFinance

Enablers

Muslim

Consumer

Educa

onandResearch

So

urc

e: T

iem

an,

M.

(20

15

). H

alal

clu

ster

s. J

ou

rna

l o

f

Isla

mic

Ma

rket

ing

, 6

(1),

pp

. 2

-21

.


Q & A

More information:

marco@lbbinternational

http://halalsupplychainmanagement.blogspot.com

HALAL SUPPLY CHAIN MANAGEMENT: Principles ... › 2017 › 10 › u...Halal Indonesia Halal Supply...

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